Dear ,

We are writing today with some important updates about the 2014 and 2015 fee schedules for stewards, and also an update on the Rules for Stewards for 2015.

In this update, you will find information on:

• The Municipal Obligation Arbitration Award Recap
• The 2014 Steward Obligation Gap
• Using Reserves To Pay Some Of The Obligation Gap
• 2014 Fee Schedule And The Associated Adjustment Due To Arbitration
• Steward Invoices And Payments
• 2015 Fee Schedule And Blue Box Rules

The Municipal Obligation Arbitration Award - Recap:

As we recently advised stewards, retired Justice Robert Armstrong rendered his decision in the arbitration between the Association of Municipalities (AMO) and the City of Toronto, and Stewardship Ontario on November 25.  While he validated all of Stewardship Ontario's key legal arguments that steward payments should be limited to reasonable costs, he found that in the absence of a negotiated agreement between AMO/City of Toronto and Stewardship Ontario, the 2014 obligation should be set at $115M.

Stewardship Ontario has calculated a 2014 Adjustment Fee Schedule designed to address the municipal obligation shortfall which is due to be paid to municipalities by March 31, 2015. The 2014 Adjustment Fee Schedule was approved this week by Stewardship Ontario's Board and Waste Diversion Ontario's Board.

Fulfilling the 2014 Steward Obligation Gap

The arbitration award set the 2014 municipal obligation at $115M. Fees paid by stewards in 2014 were based on the 2013 fee schedule because the ongoing arbitration prevented the WDO Board from approving the 2014 Blue Box Program Rules and fee schedule.  Steward fees paid in 2014 raised a total of $99.7M which has left a funding gap of $17.4M after accounting for program management costs and CNA/OCNA in-kind payments.

Relief from Reserves

After careful consideration of the effects of using reserve funds to cover the full funding gap, a decision was made by the Board of Directors to retain 10% of annual operating costs in reserve, in accordance with Stewardship Ontario's reserve policy and WDO's reserve guidelines.  Despite this restriction, Stewardship Ontario is able to apply $9.7M of reserves, leaving $7.7M to be raised from our Blue Box stewards.

2014 Adjustment Fee Schedule

The full 2014 Adjustment Fee Schedule, reflecting the above, can be viewed here.

Steward Invoices and Payments

Stewardship Ontario issued its fourth and final 2014 invoice to stewards in early November.  The arbitration decision requires us to issue a fifth 2014 invoice. The 2013 Rules (which remain in effect because the 2014 Rules were not approved by WDO) do not permit Stewardship Ontario to issue five invoices for one obligation year.  Stewardship Ontario therefore sought and received approval from WDO to create an Arbitration Adjustment Rule (available here to view) that permits the issuance of a fifth 2014 invoice to stewards. The fifth invoice, in the aggregate, will equal the difference between the 2014 steward fees invoiced to date, and the amount required to fulfil our obligations as awarded under the arbitration, less the reserve funds applied.  

Stewardship Ontario will endeavour to issue invoices to stewards before the end of this year and payment will be due February 27, 2015. Any steward that is unable to make the necessary payments by February 27th and wishes to discuss a payment plan is asked to contact Steward Services as soon as possible at 1-888-980-9549, or email us at: [email protected]. 

2015 Fee Schedule and Blue Box Rules

Due to the arbitration, Stewardship Ontario was unable to provide stewards with an approved 2015 fee schedule at the October 15th Annual Steward Meeting.  Instead, Stewardship Ontario provided stewards with two fee scenarios: one which reflected Stewardship Ontario's position on Best Practice Costs and one that reflected municipalities' position on Reported Net Costs. 

In the absence of an agreed upon 2015 obligation, stewards will be invoiced beginning April 1, 2015 based on the Net Reported Costs fee schedule, which can be found here. Stewardship Ontario believes that the 2015 fee schedule will raise adequate funds for the 2015 obligation because they are based on municipalities' net reported costs.  Discussions with municipalities will commence shortly to determine the 2015 municipal obligation based on the reasons given in the arbitration award.

2015 Rules

Stewardship Ontario has received conditional approval from the WDO Board for the 2015 Rules for Stewards.  The 2015 Rules contain some changes from previous years' rules - the most significant being the removal of the fee schedule from the Rules to be replaced by reference to the fee setting methodology in the Program Agreement. This is permitted under the Waste Diversion Act and is consistent with other waste diversion programs.

The 2015 Rules have now been posted on our website, available here, to allow for comments from stewards. Comments should be sent to [email protected] with 2015 Rules in the subject line no later than January 23, 2015. We will post any comments received and our responses along with confirmation that the 2015 Rules for Stewards and 2015 Blue Box Fees have received final approval.

Questions?

To help answer some of the questions you might have, we have included a Q&A document, available here.  If you have any other questions, please call the Steward Services team on 1-888-980-9549 or email [email protected]. We will combine all your questions and publish another Q&A.

Thank you.